Forgiveness of loan to charity - cash or non cash?

Technical topics regarding tax preparation.
#21
Nilodop  
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I have not found authorities where the facts involved a charity. But here are some where the facts involve gifts for gift tax purposes. The tax principles are the same.

PLR 200603002
In general, if an individual makes a loan and, as part of a prearranged plan, intends to forgive or not collect on the note, the note will not be considered valuable consideration and the donor will have made a gift at the time of the loan to the full extent of the loan. See Rev. Rul. 77-299, 1977-2 C.B. 343; Maxwell v. Commissioner , 3 F.3d 591 (2 nd Cir. 1993); Deal v. Commissioner , 29 T.C. 730 (1958).


RR 77-299
Thus, in the instant case, whether the transfer of property was a sale or a gift depends upon whether, as part of a prearranged plan, G intended to for­give the notes that were received when G transferred the property.
. ***
In the instant case, the facts clearly indicate that G, as part of a prear­ranged plan, intended to forgive the notes that were received in return for the transfer of G's land. Therefore, the transaction was merely a disguised gift rather than a bona fide sale.


RR 81-264
If an individual makes a loan and as part of a prearranged plan intends to forgive or not collect on the note, the note will not be considered valuable consideration and the promisee will have made a gift at the time of the loan to the full extent of the loan. Rev. Rul. 77-299, 1977-2 C.B. 343. If there was no such prearranged plan, but the promisee later forgives the debt, the promisee will have made a gift at the time of the forgiveness. The amount of the gift will equal the principal amount forgiven and the interest ac­crued to the date of the forgiveness. Section 25.2511-1 of the Gift Tax Regulations and Republic Petroleum Corp. v. United States, 397 F. Supp. 900 (E.D. La. 1975).


RR 81-286
For gift tax purposes, if a cash loan is made in a transaction that is not bona fide, at arm's length, and free from donative intent in exchange for a promissory note payable in a certain term, the promisee makes a completed gift in cash in the amount (if any) by which the amount of the loan exceeds the value of the promissory note on the date of the exchange. Section 2512(b) of the Code. This excess amount is the value of the right to use the money loaned. The right to use property, in­cluding money, is itself an interest in property, and the transfer of the inter­est is a gift for gift tax purposes. Rev. Rul. 73-61, 1973-1 C.B. 408. See Es­ tate of Berkman v. Commissioner, T.C.M. 1979-46.


RR 73-61
The tax in the instant case would be imposed on the value of the right to use the money. Such value is usually stated in terms of interest or some other equivalent in money or money's worth. The rate of interest that would rep­resent full and adequate consideration may vary, depending upon the actual circumstances pertaining to the trans­action. See Gertrude H. Blackburn v. Commissioner, 20 T.C. 204, (1953), which held that a taxable gift was made when a taxpayer sold a building to her children and received a note with interest payable at less than the usual local rate of interest on such transactions.
Last edited by Nilodop on 4-Oct-2019 4:21pm, edited 1 time in total.
 

#22
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Hasn't the OP stated the note was a bonafide loan and there was no intent when executed to later forgive it? Your cites all deal with prearranged forgiveness and/or below market interest.
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#23
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No, the third citation deals with bona fide loans:

If there was no such prearranged plan, but the promisee later forgives the debt, the promisee will have made a gift at the time of the forgiveness. The amount of the gift will equal the principal amount forgiven and the interest ac­crued to the date of the forgiveness.

I agree with Nilodop that the same principles that apply to gift taxes will also apply to charitable donations. As such, I think the following is conclusive:

The right to use property, in­cluding money, is itself an interest in property, and the transfer of the inter­est is a gift for gift tax purposes.

Based on this, the right to use cash is itself an interest in cash. Having an interest in something means owning it or a part of it. Giving up that interest to someone else means making a gift of the underlying item, in this case cash. The result is that the gift of the creditor's interest in loan proceeds is always valued at the face value of the note, just like it says in the third citation. There are no valuation discounts for uncollectibility, nor any requirements to get an appraisal.
 

#24
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Right...missed the second part of the third cite supporting a cash gift at the time the note is forgiven. Cash it is. Is class over? ;)
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#25
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Assume:
The note was a bonafide loan and there was no intent, when executed, to later forgive it;
Unfavorable changes in financial condition of the charity occurred over the years from the date of the loan to the date it was forgiven;
As a result, the FMV of the note is 50% of its face value at date of execution;
Favorable changes in financial condition of the lender/then donor occurred over the years from the date of the loan to the date it was forgiven;
As a result the borrower/charity will have difficulty in repaying the loan, and the lender/then donor is willing to and can afford to, and does forgive the loan.

Result
Chay, and apparently others, believe the result is that the gift of the creditor's interest in loan proceeds is always valued at the face value of the note, just like it says in the third citation. There are no valuation discounts for uncollectibility, nor any requirements to get an appraisal.. I read the gift tax regulation cited and forced myself to read the entire opinion in Republic and find no indication that the gift of the creditor's interest in loan proceeds is always valued at the face value of the note, just like it says in the third citation. If I missed it, please point it out to me. The citation does not say "always". Nor did I find in the reg. or the case any support that giving up the right to collect on the note is a gift of cash because cash is the underlying property. If I missed it, please point it out to me. To me, the note itself is the property.

So I'm not convinced but I can be convinced with some authorities.
 

#26
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I see there is an ongoing discussion of what is cash. viewtopic.php?f=8&t=16184&p=143150#p143150
 

#27
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Per Chay (in part quoting others) in the lower half of #23:
I agree with Nilodop that the same principles that apply to gift taxes will also apply to charitable donations. As such, I think the following is conclusive:

The right to use property, in­cluding money, is itself an interest in property, and the transfer of the inter­est is a gift for gift tax purposes.

Based on this, the right to use cash is itself an interest in cash. Having an interest in something means owning it or a part of it. Giving up that interest to someone else means making a gift of the underlying item, in this case cash. The result is that the gift of the creditor's interest in loan proceeds is always valued at the face value of the note, just like it says in the third citation. There are no valuation discounts for uncollectibility, nor any requirements to get an appraisal.


But per Pub 526:
Partial Interest in Property

Generally, you can't deduct a charitable contribution of less than your entire interest in property.

Right to use property. A contribution of the right to use property is a contribution of less than your entire interest in that property and isn't deductible.
Example 1.

You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Because you still own the building, you have contributed a partial interest in the property and can't take a deduction for the contribution.


You see, the Pub is addressing a charity specifically, and is separate from the gift tax rule. For those who prefer law to Pubs, the same rule is here in section 170(f)(3)(A).
(3) Denial of deduction in case of certain contributions of partial interests in property
(A) In general
In the case of a contribution (not made by a transfer in trust) of an interest in property which consists of less than the taxpayer’s entire interest in such property, a deduction shall be allowed under this section only to the extent that the value of the interest contributed would be allowable as a deduction under this section if such interest had been transferred in trust. For purposes of this subparagraph, a contribution by a taxpayer of the right to use property shall be treated as a contribution of less than the taxpayer’s entire interest in such property.


But in our facts, we have assumed (perhaps implicitly) that the loan included paying an adequate interest payment.

What may be sending Chay off track a bit is that the promissory note does not simply evidence the right to use money; it also requires payment for that right, namely, interest at an adequate rate. When the lender forgives the loan, they (using "they" as the new dictionary says it's OK to do) are not giving up the cash; they don't own the cash; the charity does. They are giving up the right to collect the amount loaned (and the as yet unearned interest), a property right. And as is axiomatic, a property right that is donated to a charity needs to be valued, documented, etc., and its value, as illustrated in #25 is not always its face value (or its unpaid balance).
 

#28
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Nilodop wrote:A contribution of the right to use property is a contribution of less than your entire interest in that property and isn't deductible.

A quick glance at the examples that follow this guideline shows that it doesn't apply to our facts. The examples involve allowing an organization to use real estate tax-free. The analogy in our facts would be making an interest-free loan, not canceling a loan originally made at arm's length.

When the lender forgives the loan, they (using "they" as the new dictionary says it's OK to do) are not giving up the cash; they don't own the cash; the charity does.

If the charity really owns the cash, then why is it referred to as a "borrower" in common parlance? You wouldn't say a borrower owns the item borrowed in the context of tangible property such as office equipment. Canceling an obligation of the charity to return office equipment would count as a donation of the office equipment. Why wouldn't the same hold true for cash that a charity has borrowed?

To be sure, "common parlance" isn't controlling for income tax purposes. But when we examine the transaction from a technical standpoint, we find the treatment is in line with the way I've characterized it. Income is recognized at the time the indebtedness is forgiven because until then, the borrower has not acceded to ownership of any asset. Cancellation of debt income is measured at the amount of principal outstanding because the property acquired is cash and not anything else. Anything other than cash would instead be measured at a fair market value expressed in terms of cash.
 

#29
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The examples involve allowing an organization to use real estate tax-free. The analogy in our facts would be making an interest-free loan, not canceling a loan originally made at arm's length. Yes, of course. I know that. It's why I said But in our facts, we have assumed (perhaps implicitly) that the loan included paying an adequate interest payment.. I was following from the Chay comment Based on this, the right to use cash is itself an interest in cash..

If the charity really owns the cash, then why is it referred to as a "borrower" in common parlance? . Reasonable question. Because absent specific legal covenants that restrict its use of the cash, it is free to do with it what it chooses. The lender can't spend it, but the borrower can. The lender has a promissory note receivable, entitling him to a fee for the use of the cash (interest) and the right to be paid cash at a future date. If the lender still owned the cash, how would the borrower be able to spend it? The borrower has a promissory note payable, which simply means he has to pay interest and, at maturity, pay cash in the amount of the principal. The lender has rights; the borrower has obligations.

Chay said above that the lender is canceling a note receivable. In so doing, he is giving up his claim on a certain amount of cash that the charity has or had at one point. Full ownership of the cash transfers to the charity as a result. It's a cash donation.. Not so. The lender has no claim on the cash, or on anything bought with the cash. As stated, the lender owns the cash the moment it is transferred to him.

Please, please, don't raise the argument that cash is fungible. It's not a relevant argument here.
 

#30
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Nilodop wrote:Because absent specific legal covenants that restrict its use of the cash, it is free to do with it what it chooses. The lender can't spend it, but the borrower can. The lender has a promissory note receivable, entitling him to a fee for the use of the cash (interest) and the right to be paid cash at a future date. If the lender still owned the cash, how would the borrower be able to spend it?

You haven't answered my question. I want to know why we don't treat the borrower as having acquired ownership of the cash, whether in common parlance or from a technical income tax standpoint. The fact that they can do whatever they wish with the cash doesn't explain why we don't treat them as owning the cash, it merely adds more weight to the question.

I believe the answer to my question is that cash is fungible, and you seem to have considered the same conclusion before dismissing it as irrelevant. But since you haven't offered any alternative explanations, I think you're going to have to explain why the fungible argument doesn't work.

After you're done explaining that, I'd like to know why it is that while a third party paying off the organization's liabilities would count as a cash contribution in the amount of the liability, the actual creditor cannot be afforded identical treatment for an identical result. Why would a taxpayer be able to claim a deduction for paying liabilities of a charitable organization, even when the organization has no control over what liabilities are paid, in all cases except when the liability is payable to the taxpayer himself?
 

#31
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I want to know why we don't treat the borrower as having acquired ownership of the cash, whether in common parlance or from a technical income tax standpoint.. We do.

I think you're going to have to explain why the fungible argument doesn't work.
. The cash we borrow was "paid for" by issuance of a note, just like when the government "sells" Treasury notes, bills, or bonds. That's the reason borrowing does not result in gross income. But the fungibility argument is not relevant because all it means is that even though we own the cash (common parlance and tax; else, we could not get basis or deductions when we spend it), we have to pay off the note some day - just not necessarily with the same cash.

After you're done explaining that, I'd like to know why it is that while a third party paying off the organization's liabilities would count as a cash contribution in the amount of the liability, the actual creditor cannot be afforded identical treatment for an identical result. Why would a taxpayer be able to claim a deduction for paying liabilities of a charitable organization, even when the organization has no control over what liabilities are paid, in all cases except when the liability is payable to the taxpayer himself? Because the third party is donating cash directly to the charity, who in turn pays off the note. If, OTOH, the third party bought the note from the original lender, he'd only pay its FMV (50% in an example I gave above). Then he could forgive it and get a deduction fot its FMV, not its face value.
 

#32
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Nilodop wrote:I want to know why we don't treat the borrower as having acquired ownership of the cash, whether in common parlance or from a technical income tax standpoint.. We do.

I saw your argument for why this is so from a tax standpoint, but I didn't see one for why it would be so within our common understanding. When I borrow something, I don't consider myself to own it regardless of whether it's cash or other property and regardless of whether I pay for its use or not. Even when the transaction is formalized into the sale of a note, it's still just a method of borrowing money.

You seem to disagree with that here...
The cash we borrow was "paid for" by issuance of a note, just like when the government "sells" Treasury notes, bills, or bonds. That's the reason borrowing does not result in gross income.

...but the fact that the terms "paid for" and "sells" are employed doesn't change the fact that borrowing is the controlling concept in this situation.

The tax code also views the issuance of a note payable as a borrowing and not a sale. If it were a sale, income would be recognized equal to the difference between the issue price of the note and the borrower's basis in the note. The basis, if there is any, would be negligible, and most of the loan proceeds would be taken into income. This is how things would work if the issuer of the note really did own the cash they received. Instead, there is no ownership over the cash, no income, and no sale.

But the fungibility argument is not relevant because all it means is that even though we own the cash (common parlance and tax; else, we could not get basis or deductions when we spend it), we have to pay off the note some day - just not necessarily with the same cash.

I would respond that it is relevant because that's not the only thing it means. It also means that if I lend someone money, it would be meaningless to try and trace precisely which money it was that I lent them in order to expect the same money back. So, the moment the money leaves my account, both my right and my ability to receive repayment of the money I lent become unrelated to what was actually done with the money. While a non-fungible asset is capable of being destroyed, extinguishing my ownership interest in it, my ownership interest in a fungible asset cannot be extinguished so easily. That would require an event such as bankruptcy, writing off the debt, or—as is most relevant to our facts—forgiving the debt.

Fungibility is also the answer to the question of how I can claim a deduction for an expense paid with borrowed funds. The expense results in a true reduction in net assets because the creditor's interest in my money has not decreased even though some of the money they lent is now gone. Because of fungibility, I am free to shift my perspective on the money in my account so that it now belongs to me. In that case, the creditor's interest in my money shifts to a right to a portion of my future income. The value of that right is unchanged because the interest payments will balance against the reduced present value of the cash flows. That is, of course, unless the loan is interest free, in which case there is a donative element to the loan, just as RR 81-286 confirms.

If, OTOH, the third party bought the note from the original lender, he'd only pay its FMV (50% in an example I gave above). Then he could forgive it and get a deduction fot its FMV, not its face value.

Regardless of any FMV that may exist on the note, the charity's liability to repay the full amount of the note remains unchanged. If a third party chooses to satisfy that liability in full with a direct payment, they are treated as gifting the money to the charity, who then pays off the liability.

Your proposed method of acquiring the note for 50% of value and then forgiving it for the 50% payment would also work. In both your example and mine, the deduction is for the amount of money spent. The same holds for out-of-pocket expenses in gratuitous service of a charitable organization. If I perform non-gratuitous services for a charity, there's no deduction. But if I later decide to cancel my invoice, I can take a deduction for the amount of money I spent performing the services. Likewise, if I lend money in an arm's length transaction but later decide to give up my interest in that asset, I can take a deduction for the amount of money I've canceled my interest in.
Last edited by Chay on 8-Oct-2019 11:35am, edited 1 time in total.
 

#33
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I was reading some stuff while you posted that last one:

The amount paid by a taxpayer to purchase building bonds issued by a church is not a gift made to the church, and the taxpayer is not entitled to deduct the price paid for the bonds as a contribution to or for the use of the church for Federal income tax purposes. However, in the event of a subsequent gift of such bonds to the church, the donor is entitled to a charitable deduction for their fair market value at the time of the gift, subject to the limitations of section 170(b) of the Internal Revenue Code of 1954, provided also that the church qualifies as an organization described in section 170 of the Code.
. RR 58-262.
 

#34
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I saw your argument for why this is so from a tax standpoint, but I didn't see one for why it would be so within our common understanding.. If a bank lends me money, it's mine, not theirs. I have to pay them money later, but the money they lent me is mine to do with as I choose. I have to pay the bank when due, but they don't care what I do with my money until that date. It's mine. Just hear the commercials for home equity loans.

The tax code also views the issuance of a note payable as a borrowing and not a sale. If it were a sale, income would be recognized equal to the difference between the issue price of the note and the borrower's basis in the note. The basis, if there is any, would be negligible, and most of the loan proceeds would be taken into income. This is how things would work if the issuer of the note really did own the cash they received. Instead, there is no ownership over the cash, no income, and no sale.. I think that's a misunderstanding on your part. The reason there is no income when I borrow money is that, by agreeing to pay the bank, I have offset the increase in my net worth with an equal decrease in my net worth. They are separate, the asset and the liability. I own the asset.

Your two fungibility paragraphs confuse me, but to the extent I can understand them, they seem to agree with my position.

Your last paragraph says in part In both your example and mine, the deduction is for the amount of money spent.. There is nothing in 170 that says your deduction is for the amount spent. In our facts, the amount spent happened years ago, and was stipulated to be a bona fide loan. The donation was years later, a donation of property, deductible at FMV. The substance of the transaction in the year of forgiveness is a donation of the FMV and a non-business (personal, non-deductible) loss.
 

#35
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Nilodop wrote:If a bank lends me money, it's mine, not theirs. I have to pay them money later, but the money they lent me is mine to do with as I choose. I have to pay the bank when due, but they don't care what I do with my money until that date. It's mine. Just hear the commercials for home equity loans.

My answer to this is the same fungibility argument I posted in #32: Because of fungibility, I am free to shift my perspective on the money in my account so that it now belongs to me. In that case, the creditor's interest in my money shifts to a right to a portion of my future income. The value of that right is unchanged because the interest payments will balance against the reduced present value of the cash flows.

The reason there is no income when I borrow money is that, by agreeing to pay the bank, I have offset the increase in my net worth with an equal decrease in my net worth. They are separate, the asset and the liability. I own the asset.

My original point was that the creditor has an ownership interest in the asset. As stated above, since the asset in question is fungible, the ownership interest doesn't go away just because you spend the cash. You can say you own all the cash in your bank account and it will be true, but the bank still has an interest in it and/or whatever other cash you may have or may receive in the future.

There is nothing in 170 that says your deduction is for the amount spent.

There's nothing specifically in the statute, true. But there is still plenty of precedent for deducting amounts you pay on behalf of a charitable organization. When you give up cash, the FMV is simply the amount of cash.

In our facts, the amount spent happened years ago

"Spent" may not be the most appropriate term here, but to use it anyways, there is another amount waiting to be "spent" at the present time: the repayment of the loan.

The donation was years later, a donation of property, deductible at FMV.

I agree that in some cases, this treatment would apply. The example you found from RR 58-262 is clearly one such case. The building bonds in that example are not forgiven but instead transferred; the church at its own discretion may choose to re-sell the bonds or extinguish them.

If in the same set of facts the church reneged on the building bonds, there would be a capital loss to the holder equal to the holder's basis. If the holder abandoned the bonds, there would be an itemized deduction equal to the holder's basis. A marketable security such as a bond isn't something you would typically think of as able to be "forgiven", but if it were, there is no reason to think that the treatment must match any of the three various treatments I've summarized here.
 

#36
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I don't "get" the fungibility argument, and I also don't "buy" it.

My original point was that the creditor has an ownership interest in the asset.. Certainly not in a financial statement or tax sense. An unsecured promissory note just sits out there on the window side of the balance sheet, and the cash just gets to be spent or, if it's still there, to be commingled with any other cash they have, on the left side. THe creditor has no legal, beneficial, or equitable ownership in it.

When you give up cash, the FMV is simply the amount of cash.. Right, and the same when you "give up" cash to pay a charity's expenses. But when you just cancel ("give up") a note that was issued years ago, with no gift made, contemplated, or intended, you deduct the FMV of the note. Sometimes that's the unpaid balance, often it's less.

Regardless of the property's being a bond or a promissory note, its treatment as a contribution is the same,

I admire your persistence.
 

#37
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But when you just cancel ("give up") a note that was issued years ago, with no gift made, contemplated, or intended, you deduct the FMV of the note.


Yes, perhaps years ago. And correct me if I’m wrong, but Sec 170 talks a payment made “within the taxable year.”

If Chay made a loan to United Way in 2000, he couldn’t deduct, in 2000, that cash he forked over in 2000 because it was a loan. And he can’t deduct that cash in 2019 because the cash wasn’t contributed in 2019. So, Chay is completely out of luck on any type of charitable deduction that takes the Cash route.

The creditor has no legal, beneficial, or equitable ownership in it.


Right. Although the creditor might have secured the loan, with the United Way’s backhoe, or some other United Way asset. If that happened, and we follow Chay’s route, wouldn’t we claim a non-cash donation for the backhoe, in the year we forgive the note, based on the “ownership” theory?
 

#38
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Nilodop wrote:I don't "get" the fungibility argument

The fungibility argument is like saying if you add water to a pond, you always have a right to take back the same amount of water regardless of what water it is or what fluctuations there have been in the water level. As a result, you maintain an ownership interest in that specified amount of water.

THe creditor has no legal, beneficial, or equitable ownership in it.

The creditor has an enforceable right to take back the money it loaned. That seems like a clear ownership interest to me. Your primary counter-argument seems to be "how can the creditor own the money if I own the money", and this is where the concept of fungibility comes in.

But when you just cancel ("give up") a note that was issued years ago

Cancelling a note and giving up the note to someone else are two different things. The note is what maintains an ownership interest in the cash held by the borrower. Canceling the note revokes that ownership interest, and the deduction is for the FMV of the cash. The note itself is not cash, but property. Transferring the note without canceling it causes the deduction to be for the FMV of the note.

As an analogy, think of selling a house to tenants who occupy the house vs. selling a tenant-occupied house to a third party. The value of the house will be measured differently in each case. For a third party, the tenants could cause the FMV to be higher or lower depending on the net income or expense anticipated to arise from them. That isn't a consideration for the tenants themselves.

Jeff-Ohio wrote:If Chay made a loan to United Way in 2000, he couldn’t deduct, in 2000, that cash he forked over in 2000 because it was a loan. And he can’t deduct that cash in 2019 because the cash wasn’t contributed in 2019. So, Chay is completely out of luck on any type of charitable deduction that takes the Cash route.

The cash is a constructive contribution rather than an actual transfer. There's plenty of precedent for that sort of thing.
 

#39
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The creditor has an enforceable right to take back the money it loaned.

Right, that’s all he has. FWIW, that right can only be enforced if the terms of the note are not met.

That seems like a clear ownership interest to me.

Does that mean the bank owns your house? I guess you’d be fine with going to sleep tonight only to find the Branch Manager snoring in your bed. (Ownership entails a bundle of rights, one big one is the right to use and enjoy the asset. That big right does not extend to the guy who lent the money).

The note is what maintains an ownership interest in the cash held by the borrower.

There was never any ownership to begin with.

The cash is a constructive contribution rather than an actual transfer.

No it’s not…because it was “actually” contributed in the past.

But I get where you’re going…you’d like to cast it like this: $10k loan to charity in 2017. Let’s pretend there have been interest-only payment up until now, so the balance is still $10k. FMV is $4k now. You would have it that the charity repaid $4k on the loan and then the “donor” turned around and made a cash charitable contribution for the $4k. $6k is left on the note, which the donor cancels. Under your theory – and correct me if I’m wrong - that $6k must be a valid deduction because the donor has relinquished his right to $6k of the $10k he previously lent.
 

#40
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All I'm saying is that cash, when lent, is not treated differently from any other lent asset.

When a house is lent, the owner has an enforceable right to evict and take possession of their property. The right can only be enforced if the terms of the lease are not met, but there is no question as to who owns the property. In spite of their ownership of the property, a landlord doesn't have the right to sleep in a tenant's bed. The owner has given up enjoyment of that right in exchange for income. If a landlord rents a house to a charity and later decides to transfer the title to the charity, they can take a donation for the fair market value of the house (as opposed to the rental agreement) even though the charity had physical possession of the property both before and after the transfer.

I am mystified as to why you and Nilodop seem to believe that everything must operate differently when we substitute "cash" for "house" into the above scenario. You are of the opinion that cash cannot be lent. You claim that the sequential acts of a lender transferring cash to a borrower and the borrower transferring an equivalent amount of cash to the lender are not acts of lending and returning, even though that is exactly how we normally conceive of them and discuss them. Instead, the acts are separate, unrelated transactions similar to purchases or sales. The reason, apparently, is that the borrower can do whatever they want with the cash as long as they otherwise fulfill the terms of the arrangement, even though that is precisely what anyone who borrows or leases any sort of property can do.
 

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